Abstract
The most important raw materials for bio-ethanol in Thailand are cassava, sugar cane and molasses. However, cassava has been promoted as a feed stock for ethanol due to the minimal inputs for planting, high productivity and all-year planting and harvesting. The most important factor influencing ethanol using cassava production is the price of cassava feedstock. Contract farming could decrease production costs, increase efficiency in markets, provide lower interest rates, decrease risk management and create symmetric information for cassava smallholders. The scope of this study includes cassava cultivation and factors influencing contract participation using logit analysis. Results from a survey consisting of 130 non-contractors and 127 contractors showed there was a verbal communication between farmers and agricultural cooperatives and written contractual agreement between agricultural cooperatives and processors. In addition, contract participation is significantly influenced by gender of household head, education of household members, number of agricultural groups, input costs, machinery costs, incomes and credit access.
Highlights
Since fossil fuel prices were very high in 2004, the Thai government modified programs and policies leading to increases in biofuels production and consumption
Dan Khuntod, Khon Buri and Soeng Sang will be selected as sample districts for the survey as they were the largest areas of cassava production and they had the largest number of cassava farmers (Department of Agriculture Extension 2011)
Government policy is one of the most important problems on cassava production for ethanol processing, as the price of ethanol can be more competitive than gasoline; if the government supports ethanol, lower income smallholders may face difficulty in participating in contract farming
Summary
Since fossil fuel prices were very high in 2004, the Thai government modified programs and policies leading to increases in biofuels production and consumption. The Thai government has promoted using E20 and E85 and has developed a price policy to make bio-ethanol cheaper than regular gasoline (Bloyd, 2009). Cassava has been promoted as a feed stock for bio-ethanol in Thailand due to the minimal inputs for planting, high productivity and all-year planting and harvesting (Zhang & Han, 2003; Sriroth and Piyachomkwan, 2008). There are difficulties arising from cassava production such as the quality of raw materials (Nualvatna 2003), lack of labour (Office of Agricultural Economics 2007) and aphid infestation in cassava crops (Department of Export Promotion 2010). Choosing contract farming may be the best solution for cassava production because of contracting which may decrease the cassava production costs, reduce transaction cost in markets, lower interest rate, decrease risk management and symmetric information
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